Everyone Wins in a Fiat-Chrysler Deal

Word that Fiat, of all companies, wants to save Chrysler has us thinking about that old joke about the drowning man saved by the Titanic. Neither company is particularly strong, but each gets something it desperately needs from the deal and, if nothing else, we might finally get the sweet Fiat 500.

The Italian automaker wouldn’t immediately pay anything for the 35 percent stake it is brokering with Chrysler, and Moody’s says the weakest of the Big Three probably will need another government loan to avoid bankruptcy even if the deal goes through. So what is Fiat thinking, what does Chrysler get if there’s no cash on the table, and what does it mean for consumers?

Simply put, Fiat gets a foothold in the American market, Chrysler gets some cars people might actually buy and we all get more fuel-efficient cars to choose from. And as the Los Angeles Times notes, the deal provides a glimpse of the future, where the auto industry is more global and automakers forges alliances to survive.

Although the marriage may appear no wiser than the ill-fated Daimler-Chrysler union of 1998 — after all, Fiat chief Sergio Marchionne has spent the past four years pulling the storied Italian company back from the brink — there is a certain amount of logic to it.

Fiat, which has money, gets to retool one of Chrysler’s factories to expand its manufacturing capacity and bring its cars to North America. Fiat pulled out of the American market in 1980, and its upscale brand Alfa Romeo left in ’94. The Italian company is eager to return, because it is essential to increasing volume and competing against the likes of Volkswagen.

Chrysler, which already has received $4 million in federal loans, gets Fiat’s vehicle platforms and engine technology. If the deal goes through, you’ll almost certainly see Chrysler appropriate some Fiat models and slap a few cup holders and Chrysler logos on them. That would allow the automaker to quickly and easily add compacts and midsize sedans to a lineup neck-deep with trucks, while raising its CAFE numbers and getting both Congress and environmentalists off its back.

Together, the two companies can achieve the economies of scale and geographic reach they need to survive at a time when the entire industry is faltering. Fiat Chrysler, or Chrysler Fiat, could theoretically sell as many as four million cars a year, says the Detroit News, making it the world’s sixth-largest automaker.

So what sort of offspring would this marriage create?

Well, beyond giving Chrysler some fuel-efficient cars, it increases the odds we’ll see an electric vehicle from Chrysler’s ENVI program. Chrysler has rolled out five EV prototypes and promised to put one on the road by 2010, but few industry watchers expect the company to meet that timeline, given that it’s struggled to keep the lights on.

Some sweet Italian cars also would be headed our way. Motor Trendquotes one unnamed source saying the Alfa Romeo 159 sedan and Brera coupe and Spyder would be the first to arrive. The magazine followed that report with an unnamed source saying the Fiat 500 (pictured) — think Italian Mini — city car could be here within 18 months. The magazine says a few mods to the bumpers and front fascia are all its needs to meet federal crash regs. If we’re lucky, we’ll see the hot-rodded Abarth variant too. We might also get the sporty Alfa Romeo MiTo compact that produces 150 horsepower from a tiny 1.3 liter engine.

Fiat and Chrysler walked the aisle in 1990 only to scuttle the deal at the last minute. This one still has to be approved by Fiat’s founding family, the Agnellis, according to the Wall Street Journal, but that’s probably nothing more than a formality. Given the shakeup occurring in the auto industry and the bleak outlook for the year ahead, few industry watchers give either Fiat or Chrysler much chance of survival on their own.

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